GitLab

By Chen Aizhu

SINGAPORE, Aug 16 (Reuters) - Chinese biodiesel manufacturers are looking for new outlets in Asia for their exports and checking out producing other biofuels as supply to the European Union, their greatest buyer, dries up ahead of anti-dumping tariffs, biofuel executives and analysts said.

The EU will impose provisional tasks of in between 12.8% and 36.4% on Chinese biodiesel from Friday, striking over 40 companies including leading manufacturers Zhejiang Jiaao, Henan Junheng and Longyan Zhuoyue Group in an export service that deserved $2.3 billion in 2015.

Some larger manufacturers are eyeing the marine fuel market in China and Singapore, the world's top marine fuel hub, as they look for to offset currently falling biodiesel exports to the EU, biofuel executives said.

Exports to the bloc have fallen sharply given that mid-2023 in the middle of examinations. Volumes in the very first 6 months of this year plunged 51% from a year previously to 567,440 loads, Chinese customizeds information showed.

June deliveries diminished to simply over 50,000 heaps, the lowest because mid-2019, according to customizeds data.

At their peak, exports to the EU reached a record 1.8 million loads in 2023, representing 90% of all Chinese biodiesel exports that year. The Netherlands was the leading importer in 2023, soaking in 84% of China's biodiesel shipments to the EU, followed by Belgium and Spain, Chinese customs figures revealed.

Chinese manufacturers of biodiesel have actually taken pleasure in fat revenues in the last few years, making the most of the EU's green energy policy that approves aids to business that are using biodiesel as a sustainable transport fuel such as Repsol, Shell and Neste.

Much of China's biodiesel manufacturers are privately-run small plants using scores of workers processing waste oil collected from countless Chinese restaurants. Before the biodiesel export boom, they were making lower-value products like soaps and processing leather products.

However, the boom was brief. The EU began in August last year examining Indonesian biodiesel that was suspected of preventing tasks by going through China and Britain, followed by a 14-month anti-dumping probe into Chinese biodiesel believed to be priced synthetically low and undercutting regional manufacturers.

Anticipating the tariffs, traders stockpiled on used cooking oil (UCO), raising rates of the feedstock, while prices of biodiesel sank in view of diminishing need for the Chinese supply.

"With substantial prices of UCO partly supported by strong U.S. and European demand, and free-falling product prices, business are having a difficult time enduring," said Gary Shan, chief marketing officer of Henan Junheng.

Prices of hydrotreated vegetable oil, or HVO, a primary type of biodiesel, have actually cut in half versus last year's average to the current $1,200 to $1,300 per metric load and are off a peak of $3,000 in 2022, Shan added.

With low prices, biodiesel plants have actually cut their operations to an all-time low of under 20% of existing capacity typically in July, down from a peak of 50% last seen in early 2023, according to Chinese consultancies Sublime China Information and JLC.

Meanwhile, shrinking biodiesel sales are increasing China's UCO exports, which experts forecast are set to touch a new high this year. UCO exports soared by two-thirds year-on-year in the first half of 2024 to 1.41 million loads, with the United States, Singapore and the Netherlands the leading locations.

OUTLETS

While many smaller plants are likely to shutter production indefinitely, larger producers like Zhejiang Jiaao, Leoking Enviro Group and Longyan Zhuoyue are exploring brand-new outlets consisting of the marine fuel market in the house and in the important hub of Singapore, which is using more biodiesel for ship fuel mixing, according to the biofuel executives.

One of the manufacturers, Longyan Zhuoyue, concurred in January with COSCO Shipping to use more biodiesel in marine fuel.

Companies would also speed up preparation and structure of sustainable air travel fuel (SAF) plants, executives said. China is expected to reveal an SAF mandate before completion of 2024.

They have also been scouting for new biodiesel customers outside the EU bloc, in Australia, Japan, South Korea and Southeast Asia where there are regional mandates for the alternative fuel, the authorities included.

(Reporting by Chen Aizhu; Editing by Ana Nicolaci da Costa)